What sets the LA Rams apart from the LA Chargers, resulting in a $2 billion higher valuation?

• The Los Angeles Rams, ranked No. 2 on CNBC's Official 2024 NFL Team Valuations list, have a value of $8 billion, which is $2 billion higher than the Los Angeles Chargers.
• The gap in value comes down to stadium economics.
• The Rams owner, Stanley Kroenke, financed the construction of SoFi Stadium, where both teams play.
• Kroenke owns and operates SoFi Stadium.

There is a $2 billion gulf growing in Los Angeles.

The Los Angeles Rams, ranked No. 2 on CNBC's Official 2024 NFL Team Valuations list, are valued at $8 billion, while the Los Angeles Chargers rank 26th with a value of $5.83 billion.

The difference in value between the Rams and Chargers is not solely based on their Super Bowl records, but rather on stadium economics.

The Rams and Chargers both play in SoFi Stadium, which was financed by Rams owner Stanley Kroenke for over $5 billion. Kroenke owns and operates the stadium, while the Spanos family owns the Chargers and is merely a tenant.

The Chargers receive only 15% of the stadium's revenue from luxury suites and sponsorships, while the Rams get about 85% of the revenue from these sources, as well as all the revenue from non-NFL events.

During Taylor Swift's Eras Tour in August 2023, the Chargers did not benefit from the six nights of sold-out shows at SoFi Stadium.

Last year, the mega tour was beneficial for several NFL teams. According to a source, a specific stop on the Eras Tour generated $4 million in revenue per show for the stadium hosting it.

The revenue generated by stadium economics plays a crucial role in determining the value of NFL teams. In 2023, $13.68 billion, or 67%, of the league's $20.47 billion in revenue, was shared equally among the 32 teams. However, teams do not share revenue from stadium suites, hospitality, and sponsorships, which can significantly impact their value.

Last year, SoFi Stadium hosted six Swift concerts, as well as performances by Beyoncé, Ed Sheeran, Metallica, and Pink. The Rams would retain all revenue from these shows.

The franchise retains the full $625 million in stadium naming rights for 20 years, extending through the 2039 season.

The NFL's revenue share structure is unique, with the New York Giants and New York Jets sharing stadium revenue equally, according to CNBC sources. Despite having a $500 million difference in overall franchise value, they are closer together than the LA teams.

The Rams ranked second in the NFL in sponsorship revenue last year, with the Dallas Cowboys leading the way in overall value on CNBC's 2024 list and nearing $250 million in sponsorship revenue, according to a source.

Last year, the Rams' sponsorship revenue was less than $200 million, according to a source.

The construction of your own stadium carries inherent risks. The cost of building SoFi Stadium exceeded $5 billion, making it the most expensive stadium globally, and the Rams have an NFL-record $3.5 billion in debt.

But the risk appears to have paid off.

In 2010, Kroenke bought the Rams for $750 million while the team was in St. Louis. For the 2016 season, he relocated the franchise to Los Angeles at a huge expense, including a $550 million relocation fee and a $571 million settlement fee related to a lawsuit filed by the city of St. Louis over the decision to move to California.

Since taking control of the Rams, Kroenke's investment has increased more than four-fold, totaling over $1.12 billion in fees. The Rams have made the playoffs five times and won the Super Bowl twice since moving to Los Angeles, including the Lombardi Trophy in 2021.

Since relocating to Los Angeles in 2017, the Chargers have only made it to the playoffs twice and have never progressed beyond the divisional round.

Despite not doing too well, the Spanos family has seen significant growth in the value of their San Diego Chargers team. Since August 1984, the team's value has increased 81-fold, while the S&P 500 has only grown 53-fold.

In the stock market, consider the Rams as a growth stock and the Chargers as a dividend play.